“President enacts controversial measure that aims to help borrowers, bolster the housing market and provide a fail-safe for Fannie and Freddie.” Bush signs housing rescue law | CNN Money
In response to the tanking housing market, Minnesota passed some pretty strong mortgage industry regulation last year. Alex Stenback points to an article in the Strib reporting that there are now less than half as many mortgage originators as last year. And 50 mortgage brokers surrendered their licenses, as well.
More than 50 Minnesota mortgage brokers have surrendered their state licenses this year — double last year’s rate and not including those who have gone out of business without notifying the Minnesota Department of Commerce.
The state’s 1,319 active originators last week were down from more than 4,000 last year at this time. Many of them surrendered their licenses after new state laws aimed at making it tougher to be in the mortgage business were implemented last year.
Minnesota Mortgage Industry Regulation Having the Desired Effect [Behind the Mortgage]
The Minnesota legislature put the Subprime Borrower Relief Act on Governor Pawlenty’s desk last week. The Act would have put Minnesota home foreclosures on hold for a year to give homeowners a chance to sell, refinance, or negotiate a workout plan with their lenders.
It was, in all respects, a reasonable and fair compromise that would have benefited everyone but the mortgage servicers.
The Wall Street Journal Article follows, freed from the subscriber wall:
The Justice Department and the National Association of Realtors reached a tentative settlement in an antitrust lawsuit. The NAR was seriously hampering the ability of newer, lower-cost realtors to list properties for sale online. As anyone who has recently gone house-shopping knows, you have to go to a traditional broker if you want to see all the houses on the market.
The settlement should ultimately bring down realtor commissions by finally allowing internet-based realtors to compete with traditional brokers when it comes to listing properties.
Justice Department Forces Traditional Realtors To Give Up Stranglehold on Internet Home Listings | Consumer Law & Policy Blog
The Subprime Borrower Relief Act gives borrowers with subprime loans the right to defer a foreclosure sale of their residence for one year after the bill becomes law.
I was amused to read Mark Ireland’s post saying he came under fire by members of a panel on foreclosures at the recent Equal Justice Conference in Minneapolis for suggesting that mortgage loan servicers are not acting in the best interest of either consumers or lenders. I thought that was common knowledge.
Servicers make money from the late fees, attorney fees, inspection fees, and other fees associated with foreclosure. Lenders do not. Obviously, neither do consumers.
Mark Ireland, former Minnesota Assistant Attorney General, took a look at what the three remaining presidential candidates are saying about the foreclosure crisis and translated their campaign-speak into good ol’ American English.
According to Ireland’s commentary, only Obama has a real plan. He would increase penalties for fraudulent lending, create a foreclosure-prevention fund, create a standardized scoring system for rating borrowers’ obligations, and more. (Although Obama does not mention it, I hope he would also earmark funding to prosecute the frauds, who are pretty much going unpunished.)
Ireland says Clinton wants to offer shelter to the mortgage servicers who helped create the problem, while McCain’s “proposal” is basically to do nothing.
The Issues: Housing [NYT]
Clinton, Obama, McCain On Foreclosure Crisis [Consumer Rights Watch]
(photo: The Joy Of The Mundane)
Looks like YouWalkAway.com was one of those “right place, right time” startups. Bloomberg reports that foreclosures are skyrocketing as more and more homeowners just give up. Mortgages are secured loans, after all. Banks just never counted on having to accept the collateral instead of the payback. (via Consumerist)
I guess better late than never. The NYTimes is reporting that the Federal Bureau of Investigation has opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the troubled mortgage industry. The F.B.I. is supposedly looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit. F.B.I. is also cooperating with the Securities and Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were made and packaged, and how securities backed by them were valued.
I am not holding my breath on this ever resulting in more than a hand slap to a few or at most a few peripheral or dying players will get put out of business.
What really needs to happen are two things: serious regulation of the industry as a whole, and real enforcement with the Fed’s sharing authority with the States.
Anytime you cut regulations, cut investigators, prohibit states from even enforcing federal law themselves, and state your going to trust corporations to “do the right thing” it is only a matter of time before things get out of hand.
Corporations can’t help it, they are designed to maximize profit by externalizing costs. If there isn’t a law specifically on point they will do it until told otherwise.